More banking pain in Spain

Spanish banks' bad loans rose to their highest level since October 1994 in February, as the sector fights sliding house prices and a looming recession. Non-performing loans increased by €3.8bn (£3.1bn) to €144bn in February from the previous month, accounting for 8.2 per cent of banks' credit portfolios, up from 7.9 per cent in January.

Banks face a new wave of loan defaults as the economic crisis deepens. Spain's unemployment rate is the highest in Europe, while house prices fell 7.2 per cent in the first quarter from a year ago.